Lew Sichelman
Most would-be homebuyers want to move into a house that’s pristine. Most sellers? “Eh, let ‘em fix the place up after they move in.” But each approach is a bit wrongheaded.
New houses may appear perfect at move-in, but design flaws and construction missteps often emerge down the road. And while some issues are to be expected in existing houses, especially those that have been around for decades, sellers who think they needn’t lift a finger are very likely making a costly mistake. That’s true even in a hot market where buyers are falling all over themselves to outbid one another.
Sellers should do whatever they can to make their places sparkle. Otherwise, buyers will put a price tag on what they think needs to be done, and it’s likely to be twice as much as what a seller would have spent to do the job ahead of time.
Not only do upgraded houses sell for more, they sell faster, according to a new poll by Curbio, a pay-at-closing home improvement company that helps sellers upgrade their places. Curbio found that three-quarters of all buyers want a move-in ready home, and that the most important features are the kitchen, bathrooms and flooring.
In general, these issues turn buyers off: plumbing and HVAC problems, old paint, stained carpeting and outdated features, especially in kitchens. Yet Curbio found that many sellers failed to deal with these issues, saying it was either too costly, too time-consuming or too much of a hassle.
In the end, these sellers leave money on the table. How much is anybody’s guess. But Curbio said refreshing the kitchen – painting the cabinets, replacing the counters and upgrading the appliances – offers a 377 percent return on investment.
That’s even better than a complete remodel, which has a 220 percent ROI, largely because the cost of a refresh is less than a remodel, so your dollar goes farther.
The same goes for bathrooms: a 256 percent ROI for a refresh versus 120 percent for a remodel.
EV Chargers Good for Landlords
One day, electric vehicle charging stations will be as ubiquitous as fast-food joints, with one on every other corner. For now, though, people in all aspects of real estate are having a tough time figuring out where to put them and how to pay for them.
“Every multifamily apartment owner accepts they are going to need (charging stations), but they don’t know what they need,” said David Aaronson of Refuel Electric Vehicle Solutions, a former commercial broker. “And they all want someone to make the decisions for them.”
EV charging stations represent “a very positive revenue stream” for landlords, Aaronson said at a recent meeting of real estate writers, editors and broadcasters. “They have a lucrative and captive audience every night.”
Aaronson compared charging stations to the once-standard communal laundry rooms, which tenants were charged to use (rather than each apartment having its own washer and dryer).
Eventually, Aaronson said, enough capacity will be available to serve anyone who has an electric vehicle. But right now, 99 percent of existing buildings don’t even have enough power to charge the vehicles currently parked on their properties.
Land, Labor Still Hard to Find
Land to build on is every builder’s stock-in-trade. But two-thirds of all builders say obtaining building lots is currently a challenge, with one-quarter calling the supply in their markets “very low.” The situation isn’t as bad as during the height of the pandemic, but it’s the second-highest incident of major shortages since the National Association of Home Builders began collecting data on building sites.
The current level of production means builders are using up their lot holdings faster than they can replace them. But the ability of developers to obtain credit is making it more difficult – and expensive – to supply builders with what they need.
Labor is in short supply, too. The construction industry needs some 723,000 new workers annually to meet builders’ needs, the Home Builders Institute reports.
The number of open construction jobs is currently running at about 350,000 monthly, with 90 percent of all builders saying their carpenter shortage is particularly acute.
The deficit is perplexing when you consider that hourly wages in the construction business are now nearing $36, whereas the hourly wage in the manufacturing sector is less than $32.
One reason for the worker shortfall is the clampdown on immigration. Immigrants make up a large share of the construction workforce, including more than half of all plasterers, stucco masons, and drywall and ceiling tile installers, and just under half of all roofers, painters, and carpet and flooring installers.
Rent vs. Buy
Renting is usually a less expensive alternative to buying, but just how much cheaper depends on the market.
For 15 of the 20 most popular markets for single-family home rentals, it now costs $1,030 more per month, on average, to buy than to rent. That’s according to a new report from John Burns Research and Consulting. But the spread is a whopping $1,664 in Austin and $1,410 in Denver.
In Indianapolis and Cincinnati, on the other hand, the difference is less than $200.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
